The purpose of the proposed research is to investigate the demand for publicly financed medical care using data from the Medicaid experience. A voter choice model of decision making, based on current economic theory of public goods, will be employed to explain the wide variation in Medicaid benefits across states. Using recently developed econometric techniques, quantitative estimates will be made of the influence of recipient needs, voter characteristics, local medical care market constraints, and federal policy variables, on the behavior of state policy makers. The results are expected to be of particular interest to federal level policy makers who wish to predict the response of states to federal controls and incentives.